SLG: SL Green Realty Corp. (NYSE: SLG)

SL Green Realty Corp. (the “Company”) (NYSE: SLG) newly stated net income attributable to common stockholders for the quarter finished September 30, 2k19 of $33.20M, or $0.400 for each share, as contrast to net income attributable to common stockholders of $88.20M, or $1.030 for each share, for the similar quarter in 2k18. Net income attributable to common stockholders for the three months finished September 30, 2k19 includes $3.50M, or $0.040 for each share, of net gains recognized from the sale of real estate as contrast to $68.40M, or $0.760 for each share, for the similar duration in 2k18.

Financial and Operating Highlights

  • Net income attributable to common stockholders of $0.400 for each share for the 3rd-quarter as contrast to $1.030 for each share for the similar duration in 2k18. Net income attributable to common stockholders for the 3rd-quarter of 2k19 includes $3.50M, or $0.040 for each share, of net gains recognized from the sale of real estate as contrast to $68.40M, or $0.760 for each share, for the similar duration in 2k18.
  • Funds from operations, or FFO, of $1.750 for each share for the 3rd-quarter as contrast to $1.660 for each share for the similar duration in 2k18.
  • Similar-store cash net operating income, or NOI, counting our share of similar-store cash NOI from unmerged joint ventures, raised 2.60 percent for the 1st-nine months of 2k19 apart from lease termination income and free rent given to Viacom at 1515 Broadway, as contrast to the similar duration in the previous year.
  • Signed 31 Manhattan office leases covering 268,349 square feet in the 3rd-quarter and 104 Manhattan leases covering 1,184,895 square feet in the 1st-nine months of 2k19. The mark-to-market on signed Manhattan office leases for the 1st-nine months of 2k19 was 22.00 percent higher than the previous fully escalated rents on the similar spaces.
  • Topped out steel at One Vanderbilt Avenue at 1,401 feet. Construction is more than three months ahead of plan and $100.00M under budget with an expected opening in August 2k20.
  • Manhattan similar-store occupancy was 95.30 percent as of September 30, 2k19, inclusive of leases signed but not yet begind.
  • Investing Highlights
  • To date in 2k19, the Company has repurchased a combined 2.70M shares of common stock and common units of its Operating Partnership, or OP units, under the formerly declared $2.50B share repurchase plan, at an average price of $84.080 for each share. Since inception of the program, the Company has repurchased a total of 20.60M shares of its common stock and redeemed 0.60M OP units.
  • Reached a contract to sell 220 East 42nd Street, also known as The News Building, for total consideration of $815.00M, or about $715.00 for each square foot. Net proceeds from the sale will be available for share repurchases, debt repayment or new investments. This marks one of the highest valuations for an office building ever sold on 2nd-Avenue. The transaction is expected to close in the 1st-quarter of 2k20.
  • Reached a contract to acquire a six-story, 160,000-square-foot office property on the far west side of midtown Manhattan for a gross purchase price of $90.00M. The property will be redeveloped into a modern, Class-A building, attracting companies across industries, counting TAMI and boutique FIRE tenants. The transaction is expected to close within 90 days.
  • Reached a contract to sell 1010 Washington Boulevard in Stamford, Connecticut, for sale price of $23.10M. The transaction is expected to generate cash proceeds of $21.60M and close in the 4th-quarter of 2k19.
  • Reached a 25-year ground lease for the high street retail property at 712 Madison Avenue to Graff Diamonds.
  • Sold a 49.00 percent interest in the prime retail condominium at 115 Spring Street in Soho at a gross asset valuation of $66.60M. The property was attained in 2014 for $52.00M.

Financing Highlights

  • Together with our joint venture partner, closed on the refinancing of 55 West 46th Street, also known as Tower 46. The new $198.00M mortgage replaces the previous $195.00M mortgage, has a 3-year term, with two one-year extension options, and bears interest at a floating rate of 1.250 percent over LIBOR.
  • Together with our joint venture partner, closed on a $75.00M upsize of our existing financing at 2 Herald Square to $225.00M and reduced the interest rate on the loan by 10 basis points to a floating rate of 1.450 percent over LIBOR.

The Company also stated net income attributable to common stockholders for the nine months finished September 30, 2k19 of $238.10M, or $2.870 for each share, as contrast to net income attributable to common stockholders of $293.50M, or $3.340 for each share, for the similar duration in 2k18. Net income attributable to common stockholders for the nine months finished September 30, 2k19 includes $78.70M, or $0.900 for each share, of net gains recognized from the sale of real estate as contrast to $142.70M, or $1.540 for each share, for the similar duration in 2k18.

The Company stated FFO for the quarter finished September 30, 2k19 of $151.40M, or $1.750 for each share, as contrast to FFO for the similar duration in 2k18 of $149.80M, or $1.660 for each share.

The Company also stated FFO for the nine months finished September 30, 2k19 of $458.10M, or $5.250 for each share, as contrast to FFO for the similar duration in 2k18 of $463.10M, or $5.00 for each share.

All for each share amounts are presented on a diluted basis.

Operating and Leasing Activity

For the quarter finished September 30, 2k19, the Company stated merged revenues and operating income of $313.60M and $162.10M, respectively, contrast to $307.50M and $169.30M, respectively, for the similar duration in 2k18.

Similar-store cash NOI, counting our share of similar-store cash NOI from unmerged joint ventures raised by 1.50 percent for the 3rd-quarter and 2.60 percent for the nine months finished September 30, 2k19, apart from lease termination income and free rent given to Viacom at 1515 Broadway.

During the 3rd-quarter, the Company signed 31 office leases in its Manhattan portfolio totalling 268,349 square feet. Twenty-three leases comprising 222,785 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $71.150 for each rentable square foot, representing a 3.20 percent incline over the previous fully escalated rents on the similar office spaces. The average lease term on the Manhattan office leases signed in the 3rd-quarter was 7.20 years and average tenant concessions were 3.90 months of free rent with a tenant improvement allowance of $53.180 for each rentable square foot.

During the 1st-nine months of 2k19, the Company signed 104 office leases in its Manhattan portfolio totalling 1,184,895 square feet. Seventy-seven leases comprising 820,536 square feet, representing office leases on space that had been occupied within the prior twelve months, are considered replacement leases on which mark-to-market is calculated. Those replacement leases had average starting rents of $73.180 for each rentable square foot, representing a 22.00 percent incline over the formerly fully escalated rents on the similar office spaces. The average lease term on the Manhattan office leases signed in the 1st-nine months of 2k19 was 10.70 years, or 11.20 years counting the office leases signed at One Vanderbilt, and average tenant concessions were 5.60 months of free rent with a tenant improvement allowance of $62.080 for each rentable square foot.

Occupancy in the Company’s Manhattan similar-store portfolio was 95.30 percent as of September 30, 2k19, inclusive of 213,515 square feet of leases signed but not yet begind, as contrast to 95.20 percent as of June 30, 2k19.

Noteworthyleases that were signed in the 3rd-quarter included:

  • Renewal and expansion with Kobre & Kim LLP for 67,230 square feet at 800 3rd-Avenue, for 10.80 years;
  • New lease with IMG Worldwide Inc. for 36,077 square feet at 304 Park Avenue South, for 8.10 years;
  • New lease with Chicago Title Insurance Company for 32,826 square feet at 711 3rd-Avenue, for 10.50 years; and
  • New retail lease with Ulta Beauty, Inc. for 21,706 square feet at 2 Herald Square, for 10.10 years.

Investment Activity

To date in 2k19, the Company has repurchased a combined 2.70M shares of common stock and common units of its Operating Partnership, or OP units, under the formerly declared $2.50B share repurchase plan, at an average price of $84.080 for each share. Since inception of the program, the Company has repurchased a total of 20.60M shares of its common stock and redeemed 0.60M OP units, at an average price of $96.880 for each share, saving the Company about $72.20M of common dividends and distributions on an annualized basis.

In October, the Company reached a contract to acquire a six-story, 160,000-square-foot office property on the far west side of midtown Manhattan for a gross purchase price of $90.00M. The property will be redeveloped into a modern, Class-A building, attracting companies across industries, counting TAMI and boutique FIRE tenants. The transaction is expected to close within 90.0 days.

In September, the Company reached a contract to sell 1010 Washington Boulevard in Stamford, Connecticut, for sale price of $23.10M. The transaction is expected to generate cash proceeds of $21.60M and close in the 4th-quarter of 2k19.

In August, the Company sold a 49.00 percent interest in the 5,218 square foot prime retail condominium at 115 Spring Street in Soho at a gross asset valuation of $66.60M. The property was attained in 2014 for $52.00M.

Debt and Preferred Equity Investment Activity

The carrying value of the Company’s debt and preferred equity investment portfolio reduced to $1.990B at September 30, 2k19, counting $1.950B of investments at a weighted average current yield of 9.0 percent that are classified in the debt and preferred equity line item on the balance sheet, and mortgage investments aggregating $0.040B at a weighted average current yield of 6.60 percent that are included in other balance sheet line items for accounting purposes.

Financing Activity

In October, the Company, together with its joint venture partner, closed on a $75.00M upsize of our existing financing at 2 Herald Square, $40.00M of which was funded at closing, increasing the mortgage to $225.00M, and reducing the interest rate on the entire mortgage loan by 10 basis points to a floating rate of 1.450 percent over LIBOR.

In August, the Company, together with its joint venture partner, closed on the refinancing of 55 West 46th Street, known as Tower 46. The new $198.00M mortgage, of which $192.50M was funded at closing, has a 3-year term, with two one-year extension options, bears interest at a floating rate of 1.250 percent over LIBOR and replaces the previous $195.00M of indebtedness on the property that bore interest at a floating rate of 2.125 percent over LIBOR.

Dividends

In the 3rd-quarter of 2k19, the Company declared quarterly dividends on its outstanding common and preferred stock as follows:

  • $0.850 for each share of common stock, which was paid on October 15, 2k19 to shareholders of record on the close of business on September 30, 2k19; and
  • $0.406250 for each share on the Company’s 6.50 percent Series I Cumulative Redeemable Preferred Stock for the duration July 15, 2k19 through and counting October 14, 2k19, which was paid on October 15, 2k19 to shareholders of record on the close of business on September 30, 2k19, and reflects the regular quarterly dividend, which is the equivalent of an annualized dividend of $1.625 for each share.